Michigan Blue could pay $1.6 billion over 18 years to escape from nonprofit status. (AP photo/Paul Sancya)

LANSING, Mich. (AP) — A Michigan House panel voted 11-0 Thursday to approve bills that could lead to an overhaul of Blue Cross Blue Shield of Michigan.

The panel left out anti-abortion provisions that torpedoed an earlier effort to change the status of the state’s largest health insurer.

Michigan Gov. Rick Snyder, R, has made overhauling Michigan Blue a top priority, but he voted overhaul legislation in late December 2012 because of concerns about the abortion provisions in that package.

The state Senate approved the new Blue Cross bills, Senate Bill 61 and Senate Bill 62, in late January.

The deletion of the anti-abortion provisions could clear the way for the bills to reach Snyder’s desk soon.

House Republicans last year tried to prevent insurance plans from covering elective abortions unless women bought a supplemental policy.

Snyder said he approved of the idea of imposing that requirement on the health plans that would be sold in the new exchanges, or health insurance supermarkets, to be created by the Patient Protection and Affordable Care Act (PPACA).

But Snyder said he objected to the idea of applying the anti-abortion coverage restrictions to private plans. He also vetoed the measure because it would not have allowed base health plans to cover abortions of pregnancies resulting from rape, incest and the health of the woman.

An amendment to bar insurance coverage for abortion — with exceptions for rape, incest and a woman’s health — was circulated Wednesday. No House Insurance Committee members proposed the amendment before Thursday’s vote.

Ed Rivet, legislative director for Right to Life of Michigan, wrote a letter to the committee’s Republican chairman on Thursday expressing the group’s “strongest opposition” to the draft amendment. Right to Life opposes exceptions for rape, incest, and the group had concerns about vague language making the legislation vulnerable to legal challenges, he said.

“The original effort to put this in the Blues bills was not our idea,” Rivet said in a phone interview. “We weren’t opposed to it. But it’s never been our insistence.”

Ten Republicans and one Democrat voted for the bills. Three Democrats abstained.

When the GOP-led House will vote on the Blue Cross changes has not been determined, but a spokesman for House Speaker Jase Bolger said discussions on adding abortion provisions could continue.

“If we find that language and can get everybody’s support, we would add that,” Ari Adler said. “The goal here is to get the Blue Cross reforms in a way that the governor will sign the bills.”

The proposed reworking of Blue Cross, which has 70 percent of Michigan’s health insurance market, would end its tax-exempt status and let the insurer convert to a customer-owned nonprofit. Supporters say the insurer must be modernized as it prepares for PPACA and to participate in a mandated online exchange where the uninsured and business owners can shop for insurance starting Oct. 1.

Under the legislation:

  • Blue Cross rate increase requests would be reviewed by the state insurance commissioner, as other insurers currently are, and no longer be subject to an extra layer of scrutiny by the Michigan attorney general.
  • Blue Cross would shed its charitable “social mission” and contribute nearly $1.6 billion over 18 years to an endowment working to improve public health and health care access.
  • From mid-2016 through 2021, the fund would disburse $120 million — or nearly $25 million a year — to subsidize Medigap plans, which fill the gap in Medicare coverage for seniors. Blue Cross now spends about $200 million a year, or 1 percent of revenue, to lower the cost of its Medigap policies.

Senior advocates who oppose the legislation warned legislators Thursday of sticker shop coming once a rate freeze on Medigap plans for 200,000 seniors ends in 2016. Blue Cross countered that rates go up anytime a freeze is lifted and newer insurance products such as Medicare Advantage plans will continue to be affordable options for seniors.

Bob Fox with the Michigan Senior Advocates Council said the attorney general office’s has restrained Blue Cross rate hikes that would have been much higher. Republican Attorney General Bill Schuette opposes the bills.

“We’re talking about taking the attorney general out of the process? Please rethink that,” Fox said. “He’s a seniors’ attorney. We can’t afford high-priced attorneys like Blue Cross can. AGs from both parties have done a wonderful job protecting us.”

Mark Cook, vice president of governmental affairs for Blue Cross, said Medigap is not people’s primary insurance and seniors’ health bills are mostly covered by Medicare.

“We’ve been forced to sell below cost. There will be more competition in the Medigap marketplace with adoption of these bills,” he said.